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The Filing Cabinet

"The Filing Cabinet," which covers compliance with the Dodd-Frank Act and the Sarbanes-Oxley Act, as well as other regulatory action from the Securities and Exchange Commission, executive compensation, and shareholder activism, is written by CW staff writer Joe Mont. Mont welcomes questions, comments, and statements from readers on SEC filing matters and will address them here when appropriate. Readers can contact him at joe.mont@complianceweek.com.

As the initial batch of disclosures to meet requirements of the Securities and Exchange Commission’s pay ratio rule trickle in, activists are already flagging concerns that companies may be a bit too creative with their calculations.

A quartet of Senate Democrats are demanding that the SEC’s inspector general conduct an investigation into Acting Chairman Michal Piwowar’s “reconsideration” of the agency’s pay ratio and conflict minerals rules.

Joe Montexplores new research from The Conference Board that says CEOs at the nation’s top companies have landed atop the list of the 25 highest paid executives every year since 2012, a trend that may have little to do with the price of company stock.

The House of Representatives has approved Rep. Bill Huizenga’s (R-Mich.) amendments to a financial services appropriations bill that would defund enforcement of the SEC’s controversial pay ratio and conflict minerals rules, both requirements of the Dodd-Frank Act. Joe Mont provides a closer look.

A recent survey of 1,202 individuals by Stanford University’s Rock Center for Corporate Governance shows the American public believes CEOs take home much more in compensation than they deserve. “While we find that members of the public are not particularly knowledgeable about how much CEOs actually make in annual pay, there is a general sense of outrage fueled in part by the political environment,” says Professor David Larcker of the results.

An investment adviser to the Pax Ellevate Global Women’s Index Fund has filed a rulemaking petition with the SEC, seeking a requirement that companies disclose gender-based pay ratios on an annual basis. “We believe that pay equity is a useful and material indicator of well managed, well-governed companies, and conversely, that companies exhibiting significant gender pay disparities may bear disproportionate risk, and that investors therefore may benefit from having such information,” the petition says.

Don’t believe the hype about divisiveness at the SEC. The increasingly common occurrence of split votes along party lines is a byproduct of Congressional mandates, notably through the Dodd-Frank Act, that wedge social issues into the disclosure regime at the expense of materiality. That’s the word from Commissioner Michael Piwowar, who touched upon those concerns, IFRS standard setting, and XBRL adoption during a speech this week in New York City. Details inside.

SEC Commissioner Michael Piwowar has taken the rare step of publishing a second statement opposing the newly adopted pay ratio disclosure rule (not to be confused with his first statement of outrage last week). The length and tone of the statement add fuel to the theory that his criticisms will become the blueprint for a lawsuit by other opponents of the rule. More inside.

The Securities and Exchange Commission’s pay ratio rule is now final, approved by a 3-2 vote on Wednesday. The rule requires a comparison of CEO pay to the compensation of the median employee. Concessions to corporate concerns include the ability to exclude up to 5 percent of non-U.S. employees when determining the median employee and allowing cost-of-living adjustments. Details inside.

The wait is over. On Aug. 5, the Securities and Exchange Commission will consider whether to adopt a rule requiring public companies to disclose the ratio of the annual total compensation of the chief executive officer to the median of the annual total compensation of the company’s employees. The proposed rule has been one of the most commented-upon in SEC history. Details inside.

The SEC still has given no sign of a final pay ratio disclosure rule, but there is a new analysis from its Division of Economic and Risk Analysis that the Commission has made available for public comment. The analysis considers the potential effects of excluding different percentages of employees from the pay ratio calculation. See more, including how to comment, inside.

The average compensation package for CEOs in the United States rose nearly 13 percent in 2014, driven by increasingly valuable pension plans, according to new research from Institutional Shareholder Services that analyzed early filers in the Russell 3000 index. Among firms that use equity compensation, the median grant date value of stock awards increased nearly 12 percent. Details inside.